The productivity of European workers has reached its lowest point for five years, as shown in the results of the Key Trends in Human Capital 2012 study by PwC, which was based on an analysis of data gathered from more than 2,400 organisations from 50 countries. The study was reported on by the British website HR Magazine.
The study showed that, following the period of relative stability between 2006 and 2010, there was a fall in productivity in 2011, which was related primarily to a 16% increase in employee costs starting in 2009. This growth subsequently contributed to companies suspending recruitment drives for employees in lower-ranking and entry positions, resulting in a higher proportion of experienced employees, who command higher salaries. All of this occurred at a time when companies are not showing a rise income.
The returnability of investment into human capital in Western Europe fell to 1.11; this means that employers gain 1.11 dollars for every 1 dollar invested in employees. In the USA, on the other hand, companies get back up to 20% more for every payroll dollar.
“The difficult situation on the job market is forcing experienced employees to stay in a single job for longer, meaning lower fluctuation rates and higher payroll costs for employers,” says Richard Phelps from PwC in response to the results of the study. PwC therefore recommends that companies improve their performance management processes so that value is given by employees at all levels; this primarily means systems that can distinguish between high-performance and poor employees and remunerate employees according to their performance. This, however, requires that companies understand what their employees want, what is important to them and what motivates them.
The entire study, encompassing key current trends in human resources management, can be downloaded from the PwC website here.
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